A REAL FILM INDUSTRY NEEDS PRIVATE FINANCE

Industry practitioner and past film bureaucrat, GREG SMITH, responds to Andrew L.
Urban's ARTICLE about the Australian film industry - or rather it's absence - in this
provocative letter.

Dear Andrew,You are so right to point up the policy confusion inherent in the operating structure
of the industry in Australia. My first point is: is 'the industry' that you refer to the
actual groundspring for future filmmaking in this country - or is it merely the
neo-Byzantine enclave of self comforting bureaucrats (I have been one) and the filmmakers
who know how to operate the system to maximise their share of the available subsidy
dollar? A provocative question but one which should be asked.

This is not the model for building an 'industry'. I don't ask the question to be
critical or accusing. If there is any truth in it, it has wide implications for finding
the solution you seek.

A couple of observations to indicate what I mean.

"The need to encourage and stimulate"

While CEO of both Film Victoria and NSWFTO, I would preside over the funding of
hundreds of projects each year - in script development and production funding. The reasons
were not just the 'cultural' ones to which you refer. They also included the need to
encourage and stimulate.

Valid reasons. And to try to deliver a throughput of activity that would sustain the
'industry'. Not so much the articulate and savvy writers, directors and producers and
their political representatives, but the real 'industry' - those capital intensive
infrastructure companies that filmmaking needs. Without sufficient throughput, they would
(and did) go to the wall leaving filmmaking with out studios, labs, equipment and post
production facilities.

That is why I was very keen to attract off-shore production to Australia (and a lot of
successful, collective marketing, including AUSFILM was born out of that), to smooth out
the boom/bust cycle in Australian production and to underpin the infrastructure. That
attraction has been successful and is very valuable for the long term growth of an
industry here. Fox Studios Australia is a case in point. By the way, there is no way that
a local consortium could
have, in my view, provided the depth of pocket or depth of international network to
provide such a working facility of enormous potential benefit to local filmmaking.

If, when I was at Film Vic and the NSWFTO, you had asked how many projects each year I
thought should be supported on strong commercial and creative integrity grounds (the two
are in my view inclusive, not mutually exclusive as is often postulated), I would have
answered 3 or 4. This is the nub of your problem.

"To support experiment, youth and innovation"

There is an absolute cultural need and justification for government to support
experiment, youth and innovation - and to be in a position to fund (not finance) projects
that are deemed culturally important but which demonstrably have no power to repay the
capital costs of production and distribution. The trouble emerges when it tries to do
everything and be all things to everyone. That is what it has been trying to do for the
last decade or more. Necessarily embracing the mantras of economic rationalism in the
belief that that would sway more money from the politicians, the filmmaking community has
done itself a disservice and presented its bureaucrats with an impossible conundrum and an
impossible argument.

The truth is that if there is to be a real film industry it needs to engage private
finance - not just subsidy. The other truth, and a sad irony, is that for the last decade
or more, private finance has effectively been excluded from participating in financing
Australian film. The mainstream of talent has cobbled together its necessary (if often
inadequate) production budget by a combination of 'soft' government funding with
distribution guarantees - often set at a rate that is cognisant of the level of subsidy
available. The projects offered to the private finance market have generally (Strictly
Ballroom and Crocodile Dundee are notable exceptions) been the marginal ones or those that
were in truth merely vehicles for taxation minimisation - not needing much creative,
commercial or any other credibility.

And so, the private finance market has a rather dim view of Australian filmmaking as an
investment opportunity. Worse, it has not spent time to do its 'due diligence' to learn
about the characteristics of good filmmaking and exploitation. Effectively, until the FLIC
Scheme, they were not really invited to do so.

Involvement of the private finance market will address many of your concerns, Andrew. Once
it knows what it is dealing with, it will bring its usual business disciplines to bear. If
satisfied, it will bring significant additional capital to filmmaking. Which will deliver
viability for essential infrastructure (do we really need to debate the need for
Australian filmmaking to meet international production standards of production and
distribution?) It will defeat the argument
that the government should just keep giving more and more subsidy: if we want an industry,
surely we cant believe it can secure long term growth and success on the back of subsidy.
It will conversely allow the government to do what it should; to concentrate on
underpinning those cultural objectives.

"Art in commerce"

Back to my first point: there is an emerging generation of filmmaking talent that does
not belong to the enclave. They don't know the rules - I hope they never do. They
represent what you identified - art in commerce. They are talented; they expect to take
risk; they recognise the responsibility that attaches to asking others to take risk. For
them, exploitation is not a dirty word. In other circles it might be called propaganda. It
is about the fundamental requirement of getting the story you want to tell to people who
want to see it.Greg Smith

Greg Smith is Executive Director Creative
Affairs of Content Capital Ltd, one of the FLIC companies established last year,
endeavouring to raise up to $20 million in tax deductible film and tv production finance
(among other things). He has previously been director of Film Victoria and the NSW Film
and TV Office, both Government film agencies.